Xylitol still disappoints Danisco

16-Sep-2009 - Last updated on 17-Sep-2009 at 14:25 GMT

Danisco sold ‘somewhat disappointing’ volumes of xylitol at the start of its new financial year, but says the sweeteners division is on track for recovery thanks temporary closure of xylitol plants and inventory reductions.

Xylitol has proved a big drag on Danisco’s sweetener division in recent reporting periods, as demand has been lower than expected. The company ramped up production in 2007, but a previous shortage meant some users had already reformulated to other sweeteners.

In Q1 2009/10 the sweeteners division saw a 15 per cent decline in organic growth compared to Q1 last year, with revenues of DKK376m.

The company said xylitol was mostly to blame for this, even though it did manage to gain some new applications. A taskforce was charged with identifying new applications last year.

Litesse polydextrose continued to do well on the other hand, which the company said reaffirms its strategy to focus on health and wellness in sweeteners.

The top priority for the sweeteners division this year is to realign its cash flow – and the new leadership team looks to be on track, thanks to inventory reduction, reduced its production of xylitol in China and mothballing the xylose facility.

Stephane Constant was appointed as the new executive vice president to head up its sweeteners division in March, following the resignation of Nicholas Dunning.

“The underlying xylitol market is characterised by fierce price competition,” said the company. “Sweeteners’ xylitol position remains challenging with somewhat disappointing volumes for the quarter.”

Other divisions

Other divisions within the Danisco group performed much better in the quarter, leading to overall organic growth of 2 per cent. Revenue was up DKK 3449m, from DKK 3235m.

The shining star was cultures, which saw 11 per cent growth, followed by Genecor with 6 per cent.

Enablers, made up of emulsifiers and gum systems, was stable with good demand.

At its annual general meeting last month Danisco laid out five areas of focus at the heart of its business.